TENNECO ANNOUNCES SALE OF PERCS;
ACTION PROGRAM REACHES $2 BILLION TARGET
HOUSTON, Dec. 17 /PRNewswire/ -- Michael H. Walsh, Tenneco president and CEO-designate, said today that with the successful completion of its PERCS equity offering for $516 million, the company will have achieved the $2 billion restructuring plan announced Sept. 11.
"Reaching that target is a milestone for Tenneco for two reasons," Walsh said. "First, the program significantly strengthens the company's fundamental financial outlook. Second, and more importantly, it illustrates how this company will operate -- we will make commitments and do our utmost to keep them."
Walsh said the combined elements of the $2 billion action plan are:
-- The PERCS offering of 17.5 million depositary shares at $29.50
per share, for $516 million.
-- The previously announced agreement to sell its natural gas
liquids business, including an MTBE plant under construction,
to Enron Corp. for $632 million of cash and assumed debt.
-- The previously announced agreement to sell three short-line
railroads for $54 million.
-- The halving of the company's regular quarterly dividend from
80 cents to 40 cents a share, which will save $50 million in
the fourth quarter of 1991 and improve cash flow and retained
earnings by $200 million a year beginning in 1992.
-- The commitment by Tenneco Inc. and its operating companies to
headcount and other cost reductions of $250 million in 1992.
-- A reduction in capital spending by $50 million in 1991 and
$250 million in 1992.
These actions total $2.0 billion. The company also indicated it would seek an additional $50 million in cost savings beyond the $250 million previously announced. In substantial part, these cumulative cost reductions will be achieved through the elimination of more than 6,000 jobs on a companywide basis by the end of 1992.
"While this achieves the company's original action plan commitment," Walsh said, "we will continue to aggressively pursue the additional asset sales announced in September."
These include the sale of its sodium chlorate business, certain timberland properties, Sperry Marine and Viscosity Oil. "After these asset sales are achieved, we will have substantially exceeded the $2 billion target established in September," Walsh said.
In addition to these actions to strengthen the balance sheet and enhance its financial flexibility, Walsh reiterated the commitment of Tenneco management to continue to take aggressive actions at its J I Case farm and construction equipment unit. In 1991, Tenneco has taken restructuring charges of $552 million, of which more than 80 percent is for programs at Case. These programs include headcount reductions, plant closings and product line rationalizations.
Tenneco has also continued to strengthen the management team at Case, most recently with the naming of Edward J. Campbell as president.
"Our goal for Case remains the same -- to return it to profitability as soon as possible," Walsh said.
Walsh said that while economic conditions facing all industrial companies remain difficult, Tenneco is committed to doing what is necessary to continue to improve the company's financial flexibility and earnings growth prospects.
"Achieving our $2 billion action plan demonstrates this resolve," Walsh said. "We are going to continue to do whatever is necessary to ensure the future prospects of this company."
The PERCS offering which commenced today includes 17.5 million depositary shares at $29.50 per share, with an annual dividend of $2.80 per share. On Dec. 31, 1994, each depositary share will automatically convert into one share of Tenneco common stock. The company may call the depositary shares for conversion at any time into shares of common stock having a value initially equal to $46.35 per share, declining to $42.75 after Oct. 31, 1994.
The net proceeds from the sale of the PERCS will be used to reduce short-term debt.
Morgan Stanley & Co. Incorporated and The First Boston Corporation are managers of a nationwide underwriting group for the PERCS offering.
Tenneco Inc. (NYSE: TGT) is a Houston-based, diversified industrial corporation with major business interests in natural gas pipelines, farm and construction equipment, automotive parts, shipbuilding, packaging, chemicals and minerals.
-0- 12/17/91
/CONTACT: Thomas J. Slocum of Tenneco, 713-757-3430/
(TGT) CO: Tenneco Inc. ST: Texas IN: OIL SU:

JT -- NY037 -- 2919 12/17/91 11:30 EST

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